9888.HK · HKG · Communication Services
Baidu, Inc.
Also onConsensus Drift
Implied value per share
HKD 195.98
Market price
HKD 87.20
Implied upside
+124.7%
5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · CNY model at 1.1708
Value Per Share
Same forecast, different terminal treatment. Percentages vs price.
Forecast Cashflows
Reporting currency (CNY). Outflows negative.
| Line | FY26 | FY27 | FY28 | FY29 | FY30 | CAGR |
|---|---|---|---|---|---|---|
| Revenue | CNY 130.9bn | CNY 132.8bn | CNY 134.7bn | CNY 136.7bn | CNY 138.6bn | +1.4% |
| EBIT | CNY 17.4bn | CNY 17.6bn | CNY 17.9bn | CNY 18.1bn | CNY 18.4bn | +1.4% |
| NOPAT | CNY 14.5bn | CNY 14.7bn | CNY 14.9bn | CNY 15.2bn | CNY 15.4bn | +1.4% |
| Add depreciation & amortisation | CNY 21.0bn | CNY 21.3bn | CNY 21.6bn | CNY 21.9bn | CNY 22.2bn | +1.4% |
| Less capital expenditure | CNY -10.4bn | CNY -10.6bn | CNY -10.7bn | CNY -10.9bn | CNY -11.0bn | +1.4% |
| Less increase in working capital | CNY 1.9bn | CNY 1.9bn | CNY 1.9bn | CNY 1.9bn | CNY 2.0bn | -1.4% |
| Free cashflow to firm | CNY 27.0bn | CNY 27.3bn | CNY 27.7bn | CNY 28.1bn | CNY 28.5bn | +1.4% |
| Discount factor | 0.9686 | 0.9088 | 0.8527 | 0.8000 | 0.7506 | - |
| Present value | CNY 26.1bn | CNY 24.9bn | CNY 23.7bn | CNY 22.5bn | CNY 21.4bn | -4.8% |
| Present Value Of The Forecast | CNY 118.6bn | |||||
Discount Rate
Source shown per component. All overridable above.
| Risk-free rate | 3.20% | HKD assumption - no free live source available for this market (assumption) |
| Equity risk premium | 7.00% | Market assumption |
| Beta | 0.711 | Reported 0.569, pulled toward 1.0 (Blume) |
| Cost of equity | 8.18% | Risk-free + beta x equity risk premium |
| Cost of debt | 3.20% | Floored at the risk-free rate (implied cost of debt was lower) |
| Market capitalisation | CNY 237.9bn | 71.0% of capital |
| Total debt | CNY 97.1bn | 29.0% of capital, book value as a proxy |
| Tax rate | 16.5% | Effective, capped at statutory |
| WACC | 6.58% | E/V x Re + D/V x Rd x (1 - t) |
Terminal Value
Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.
Perpetuity growth at 2.50%
73% of EV
- Forecast FCFF, final year
- CNY 28.5bn
- Capex at depreciation, working capital in reinvestment
- CNY 27.6bn
- Less reinvestment at g/ROIC (38.0% of NOPAT)
- CNY -10.5bn
- Capitalised
- CNY 17.1bn
- ROIC (WACC floor)
- 6.6%
- Terminal value, undiscounted
- CNY 429.7bn
- Terminal value, discounted
- CNY 322.6bn
- Enterprise value
- CNY 441.1bn
- Less net debt
- CNY -18.2bn
- Equity value
- CNY 459.3bn
Exit at 6.9x EBITDA
64% of EV
- Terminal value, undiscounted
- CNY 281.5bn
- Terminal value, discounted
- CNY 211.3bn
- Enterprise value
- CNY 329.9bn
- Less net debt
- CNY -18.2bn
- Equity value
- CNY 348.0bn
Spread between methods: 28%.
Sensitivity
Value per share (CNY) by discount rate and long-run growth.
| Long-run growth | |||||
|---|---|---|---|---|---|
| Discount rate | 1.50% | 2.00% | 2.50% | 3.00% | 3.50% |
| 4.58% | 238.23 | 241.69 | 246.41 | 253.57 | 266.55 |
| 5.58% | 194.03 | 194.74 | 195.44 | 196.15 | 196.85 |
| 6.58% | 166.24 | 166.81 | 167.39 | 167.96 | 168.53 |
| 7.58% | 145.78 | 146.25 | 146.73 | 147.21 | 147.69 |
| 8.58% | 130.08 | 130.48 | 130.89 | 131.29 | 131.70 |
Outlined: this model. Green text: above today's price of 74.48. Shading: distance from this model's own value.
Priced In
What each input would have to be to justify the current price, one at a time.
| Input | Model | Implied | Gap |
|---|---|---|---|
| Revenue growth, every year | 1.4% | -11.6% | -13.0pp |
| EBIT margin | 13.3% | -0.6% | -13.9pp |
| Discount rate | 6.6% | 16.2% | +9.6pp |
Live formulas, not pasted numbers - edit a driver and the workbook reprices.
Yahoo Finance and RBA data. General information, not advice. Methodology.